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Dive Brief:

Current and former employees at Tesla's photovoltaic cell and panel factory, the Gigafactory 2, say assembly-line problems and difficulties with the aesthetic design of the product have delayed solar roof tile production, Reuters reports.

Production challenges with the Solar Roof product have led Panasonic, Tesla's partner in the joint venture, to seek additional buyers for its solar cells, Reuters confirmed. During its Q2 earnings call on Aug. 1, Tesla reported 84 MW of its solar products were installed in the U.S. during the past quarter — 52% less than the installations during the same period last year.

During the call with investors, CEO Elon Musk boasted that "several hundred homes" had the Solar Roof on them. He said he expects the Buffalo, N.Y. factory's solar cell production to ramp up next year.

Dive Insight:

Musk emailed employees on Tuesday about his considerations to take Tesla private at a price of $420/share, to "free [the company] from as much distraction and short-term thinking as possible." Musk seeks to protect the company from the "major distraction" of stock price volatility and to get out of the the quarterly earnings cycle. A statement from Tesla's board of directors confirmed that Musk opened a discussion about privatization last week.

While the electric vehicle manufacturer tries to meet its production targets for its latest luxury sedan, company statements maintain that the solar operation — obtained through its acquisition of SolarCity in 2016 — remains important to Tesla.

​However, SolarCity's production has declined since the Tesla acquisition, as represented by the chart below from Reuters.

Internal documents from the company have also shown plans to shutter 13 or 14 solar installation facilities, leaving nearly 60 facilities open, following Tesla's reorganization intended to grow its solar and residential storage energy business through its own sales channels. The company announced in June a move to cut 9% of its employees and not continue its partnership with Home Depot for residential solar sales.

The Buffalo, N.Y. facility is required to be in operation, according to an agreement that Tesla struck with the Research Foundation for the State University of New York (SUNY) Foundation.

According to Tesla's 2017 10-K SEC filing, the SUNY Foundation helped construct the Gigafactory 2 by investing $750 million into the project, from construction costs to manufacturing equipment and "additional specified scope costs." The company needs to employ a certain minimum of personnel from in-state and to spend $5 billion in the decade following completion of construction.

The Gigafactory 2 combines technology developed by Tesla, its subsidiary SolarCity, and Panasonic, which develops the photovoltaic cells and provides the manufacturing.

The Solar Roof and Tesla's other rooftop solar products are being paired with Tesla's residential storage batteries.

During the Q2 earnings call, Tesla executives predicted 300% to 400% growth levels in 2019 for its energy storage business, although the company had shut down a Powerwall battery manufacturing production line in order to make more batteries for its Model 3 car. "We're adding new cell lines and we'll be able to address" battery cell shortages soon, Musk said.